While the largest companies are the most likely to automate, there are steps small companies can take to play catch up.
The Accounts Payable Network has been releasing benchmark surveys on accounts payable automation for nearly a decade. One trend has held steady during that time: the larger the organization, the more likely they have automated.
In October 2011, TAPN published a benchmark survey on automation practices. According to the results, 34 percent of organizations with 35,000 or more employees describe their level of automation as high. Meanwhile, only 5 percent of companies with less than 500 employees would do the same.
What benefits does having high levels of automation bring you?
Accounts payable departments in larger companies can typically process more invoices per FTE. For example, the median organization with more than 10,000 employees processes 1,288 invoices per FTE per month. The median organization with less than 500 employees processes 417 invoices per FTE per month.
Highly automated organizations have access to a variety of technologies that make invoice processing more efficient. Technologies such as electronic invoicing, front-end imaging, automated workflow, vendor self-service portals, and purchase cards all give organizations an edge when it comes to increasing efficiency. Large organizations are more likely than small to have these technologies.
If your organization receives paper invoices, the sooner you can input the data into your financial system, the sooner you can process and pay those invoices. Routing paper invoices around for approval is expensive and time-consuming. Front-end imaging and workflow is a necessity if your goal is to eliminate paper routing.
While 44 percent of all AP departments have implemented front-end imaging and workflow, small organizations still lag behind their larger counterparts. Sixty-three percent of companies with 35,000-plus employees have the technology, compared to 21 percent of companies with less than 500 employees. Small organizations cannot process invoices quickly if they are shuffling paper.
The numbers are similar when it comes to electronic invoicing, which totally eliminates paper from the invoice receipt process. As with imaging and workflow, 63 percent of the largest companies use some form of e-invoicing. However, just 8 percent of the smallest organizations do.
Getting Small Organizations Automated
Improved productivity is the most common reason organizations implement accounts payable automation, according to the survey results. With small organizations showing the lowest number of invoices process per FTE, surely they would embrace automation as a way to improve efficiency.
However, small organizations often run up against one of the largest hurdles to automation: cost. It costs money to be able to implement technology to save money.
As technology has evolved, small organizations now have more opportunities to automate. For example, software-as-a-service and cloud workflow systems allow small companies to see the same benefits as larger ones, without the same up-front costs.
Advancements in procurement cards have created a path for more organizations to improve. Talk to your bank about virtual payment, which allows your company to maintain your existing invoice approval and payment process. The only difference is that, when you issue payment, the vendor is paid via card. Your disbursement costs go down and you can earn valuable card rebates.
It's also important for all organizations – especially smaller ones with limited resources – to make a strong business case when trying to win management approval. The case should state the benefits of the project and justify the initial cost.
Management will be more likely to approve an automation project if the initial costs are low and the return on investment is clear.